Doing fair, but Dec had better figures

TNN|

May 01, 2007, 04.46 AM IST

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With 400 more companies declaring results, the verdict on corporate performance in the March quarter is out. The going has been good, though not as good as three months ended December ’06. In the previous week 140 firms announced their numbers. Sales for 539 companies which have declared results so far, have risen 31.9% YoY to Rs 1,51,010 crore, while the combined net profit is up 46.1% to 21,050 crore. In the December ’06 quarter, revenues grew 38% and net profit 57.6%.

A better picture of corporate performance emerges by excluding banks and oil & gas companies from the sample. (The smaller group has been used for the rest of the analysis here. It shows improved performance.) Sales grew 38.6% to Rs 1,03,467 crore and net profit 56.7% to Rs 14,612 crore. In this case, sales growth is higher compared to the December’06 quarter’s 36.5% growth, though net profit growth is lower compared to 63.9%.

Let’s look at some of the concerns that were voiced and how their impact. First, expenditure growth. Expenditure has grown 37.8%, lower than sales growth, leading to a rise in operating profit margins. OPM increased 50 basis points to 18.7% in the March quarter, but fell compared to the 20.2% level in December ‘06 quarter. Corporates have been able to pass on the higher cost to customers and are still unruffled by inflation.

But interest outgo has gone up, reflecting higher borrowings and interest rates; interest payment rose 32% to Rs 1,297 crore. If this did not affect profit growth, it was partly due to the fact that interest accounted for just 1.3% of sales and higher other income. Other income grew 47.9% to Rs 3,779 crore in the quarter. New projects seem to be coming on stream, as depreciation increased 14% during the quarter. Leading the list of sectors which did well were capital goods, telecom, cement, media and entertainment, infotech, and pharmaceuticals.

Some of the large companies, that did well during the quarter were Bharti Airtel, with rising 60% and net profit 152%. Siemens posted a 90% growth in sales though profit was down by 8%. Companies that failed to put up a good show were Reliance Industries (with just 5% more sales), Hindustan Zinc (13.8%) and National Aluminium (1.9%.)

This is also the quarter when full year results for most companies are declared. During FY’07, sales grew 31.9% to Rs 432,124 crore and net profit rose 51.3% to Rs 62,107 crore. However, this includes the results of banks and oil & gas companies.